This Is One Cannabis Investment You Might Not Have Thought About
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If you are an active investor or leading a significant company in cannabis, you need to be considering getting involved in Europe in the near future. Since the start of 2021, we have already seen powerful movements driving the future of cannabis on the continent.
Some of the most significant factors moving the cannabis needle: The United Nations recently voted to reschedule cannabis as a medicine, Jazz Pharmaceuticals bought G.W. Pharmaceuticals for $7.2 billion, CuraLeaf bought EMMAC Leaf Sciences for $285 Million, and the London stock exchange allows cannabis listings now with three listings carrying over $100 million valuations. However, it isn't just mergers and acquisitions — Europe has a 700 plus million population, which carries in the largest countries a 70 percent favorability to cannabis legalization.
Beyond that, there are some key things to keep in mind as a North American looking to play the long game in Europe.
Currently, Europe is a medical and pharmaceutical cannabis market. Culturally, many countries spanning the continent are more invested in holistic medicines. Unlike the United States pharmaceutical industry, which the FDA and synthetics guide, Europe's pharmaceutical sector embraces plant-based pharmaceutical developments.
But just as the U.S. started with medical cannabis before delving into adult use, Europe will follow the same path. Countries like the Netherlands and Switzerland are already moving towards the early adoption of recreational programs, but the big mover will be Germany who may go recreational in 2022. If this happens, you will see a spread across the other countries.
Europe has the advantage of starting with a robust supply chain through its pharmaceutical networks. There is no need to build additional infrastructure like dispensaries. The reach is much farther, making it much more efficient to get medicines to all corners of each country.
There are well over 100,000 pharmacies in the E.U. and over 200,000 on the continent. Imagine if a grower or manufacturer had to supply just one bag of flower and one product to each pharmacy monthly, weekly, or even daily. These are staggering numbers when you compare a state's needs versus an entire continent. But this is exactly how things should be and exactly how everything from Aspirin to Antibiotics reaches people.
Across the U.S., we see the advent of lounges, which is probably what dispensaries of the future will look like. In Europe, there are over 500 coffee shops in the Netherlands and over 500 private clubs in Spain. By all indicators, Europe is more advanced and prepared for the future of cannabis sales.
Higher industry standards
With large-scale distribution, infrastructure comes pre-existing standards for products. This is something the U.S. has gone mainly without due to federal ambiguity. The European path is EU-GMP - "Good Manufacturing Practices" - for pharmaceutical production. With one facility, you can send to any country and concentrate your investment and economy of scale in one facility rather than each state.
Standardization not only brings acceptance to consumers but it fosters consumer protection and doctor's acceptance. These clear rules have been developed for decades and allow corporations to achieve proper scale and safety of the investment. Imagine being able to concentrate on product innovation without the burn of state-by-state facilities plus dispensary investment. Again, Europe is a more advanced model for scaled growing and manufacturing.
There is no special marijuana enforcement in Europe since the health authorities in each country have been approving medicines for decades. In some cases, the rules are more manageable than traditional medicine and only require proof of quality rather than extensive clinical trials. This dramatically speeds the time to market, reducing wait from 5 years to 2 years or less. If you want to claim to help a specific ailment, you can participate in informal trials and formal trials. There are over 1,090 Cannabis trials worldwide, with 624 in the USA and 215 in Europe.
The expectation is that Europe will overtake the U.S. in trials within the next two years due to the legality of cannabis as a medicine. As for THC trials, there are 154 in the U.S. compared to 78 in Europe— incredible considering the U.S. had over a 10-year head start. Clear regulatory frameworks will give Europe the edge over all other markets.
Europe is on a fast track to being the largest cannabis market globally and has the most modern infrastructure to achieve this goal. The EU-GMP pharmaceutical seal of approval is a global gold standard for medicines, and the acceptance of holistic plant-based medicine is ingrained in their culture. About ten large-scale companies currently operate in Europe like Tilray, EMMAC, Clever Leaves, and Aurora. Still, there are well over 100 startups that are looking at London listings or servicing the industry. Getting into the cannabis industry in Europe is an investment today if you want growth for years to come.